The yield on three-month interest-rate swaps rose 11 basis
points, or 0.11 percentage point, to 4.56 percent, according to
data compiled by Bloomberg. That’s the biggest increase since
Jan. 31.

Colombia’s central bank kept the overnight lending rate at
4.75 percent, bank chief Jose Dario Uribe said Sept. 28 after
the close of market. While 12 analysts surveyed by Bloomberg
expected a 25-basis-point cut, 22 had predicted no change.

“The central bank has entered a wait-and-see mode,” said
Eduardo Bolanos, an analyst at Asesores en Valores brokerage in
Bogota. “The market is starting to price in the end of the
monetary expansion cycle, at least until year-end.”

The peso erased earlier gains, closing little changed at
1,800.65 per U.S. dollar. It has jumped 7.7 percent this year.

The central bank also extended its plans for dollar
purchases in a bid to ease the local currency’s rally. Banco de
la Republica will buy a minimum of $3 billion between Oct. 1 and
March 29, in amounts of at least $20 million per day, Uribe said
after the monetary policy meeting. The central bank has
previously said it would purchase a minimum of $20 million until
at least Nov. 2.

Finance Minister Mauricio Cardenas, who is also president
of the central bank’s board, told reporters after the meeting
that the Treasury will “reinforce” the central bank’s
intervention with dollar purchases of its own.

The government’s Petroleum Stability Fund, where some of
the country’s oil royalties are invested, will continue to buy
dollars, Cardenas said. The fund will end the year with about $1
billion in dollar holdings, from about $500 million now, he
said.

The peso usually weakens in the last two months of the year
as foreign companies in Colombia repatriate revenue, said
Bolanos. He forecasts the local currency will weaken to 1,850 by
the end of 2012.